Group: Shareholders OK'd deal for Qantas

The group bidding 10.8 billion Australian dollar ($8.9 billion) for Australia's Qantas Airways said Saturday just enough shareholders had accepted its offer to keep the deal alive _ hours after saying it had failed.

In a dramatic turnaround, Airline Partners Australia said a large investor had accepted its bid after a deadline of Friday evening had passed _ pushing it over the 50 percent minimum stake necessary to get a two week extension for the offer.

APA said it would now ask regulators to let the deal go ahead.

"On Friday evening, APA announced that, subject to confirmation, it appeared that the offer had failed to reach the 50 percent level required for the offer to proceed," the group said in a statement.

"However, subsequently on Friday, APA received an acceptance from a large investor, which would be sufficient to take acceptances for Qantas shares to more than 50 percent. APA intends to make submissions to the Takeovers Panel to allow the offer to continue," it said.

Under Australian takeover laws, APA needed 50 percent acceptance by 7 p.m. Friday (900 GMT) to get a two-week extension on its offer of 5.45 Australian dollars a share for the iconic company known as the Flying Kangaroo.

With the late acceptance, it now has 50.6 percent.

If regulators allow the bid to proceed, APA needs to reach 70 percent in the next two weeks for its financial package of loans to kick in and the deal to proceed.

The Qantas board, which backed the APA bid, was expected to meet Saturday to discuss the situation.

The Takeovers Panel is a business group given powers by the Australian Securities and Investments Commission to resolve disputes on takeovers.

The development was the latest twist in an often rocky passage for the bid, being led by Australia's Macquarie Bank and Forth Worth-based TPG, formerly known as the Texas Pacific Group.

It faced strong opposition from labor unions and others who fear Qantas, formerly a government-owned company, could be broken up or its ownership taken overseas _ something barred by law.

Prime Minister John Howard's government gave the bid the go-ahead after regulators found it did not breach foreign investment laws or specific legislation that aims to keep Qantas an Australian company.

The bid was also contested because its structure adds a massive debt load to the company while earning board members and takeover partners such as Macquarie huge fees. Moody's Investor Services has warned that Qantas' credit rating could be downgraded several notches to Ba3 if the takeover proceeds.

The group planned to raise up to 7.5 billion Australian dollars ($6.2 billion) in debt and 3.5 billion Australian dollars ($2.9 billion) in equity to fund the acquisition, then use its controlling stake to return about 4 billion Australian dollars ($3.3 billion) in capital to shareholders within 12 months and burden Qantas with more debt.

To date, the 2001 buyout of telecommunications company Optus by Singapore Telecommunications, or SingTel, for about 14 billion Australian dollars is considered Australia's biggest corporate takeover. But the size of the Qantas deal could be overshadowed by plans by retailer Coles Group for the full sale or breakup of the 19 billion Australian dollars ($15.6 billion) company.